United States v. Meadows
| Decision Date | 24 May 2016 |
| Docket Number | Case No. 14-cr-251 (SRN/JSM) |
| Citation | 189 F.Supp.3d 882 |
| Parties | United States of America, Plaintiff, v. Sean M. Meadows, Defendant. |
| Court | U.S. District Court — District of Minnesota |
Benjamin F. Langner, Melinda A. Williams, and James S. Alexander, United States Attorney's Office, 300 South 4th Street, Suite 600, Minneapolis, MN 55415, for Plaintiff.
Lisa Lodin Peralta, Robins Kaplan LLP, 800 LaSalle Ave, Ste. 2800, Minneapolis, MN 55402, for Defendant Sean M. Meadows.
Lousene M. Hoppe, Fredrickson & Byron, PA, 200 South 6th St., Ste. 4000, Minneapolis, MN 55402, for Third Party Petitioner Michelle Meadows.
Natus Corporation d/b/a Hamernick Decorating Center, 1381 Rice St., St. Paul, MN 55117, pro se Third Party Petitioner.
M. Jean Stepan, Ramsey County Attorney's Office, 121 7th Pl. East, Ste. 4500, St. Paul, MN 55105, for Third Party Petitioner County of Ramsey.
FINAL ORDER OF FORFEITURE
This matter is before the Court on Third Party Petitioner Michelle Meadows' Petition for an Ancillary Hearing on Forfeiture ("Meadows Petition") [Doc. No. 99], Third Party Petitioner Natus Corporation's Petition of Interest in Property at 973 Payne Ave ("Natus Petition") , Third Party Petitioner County of Ramsey's Petition of Interest ("Ramsey Petition") [Doc. No. 104], and the Government's Motion for Partial Summary Judgment and Motion for a Final Order of Forfeiture (collectively, the "Government's Motions") [Doc. Nos. 154 and 155]. A hearing on the Government's Motions was held on March 25, 2016. For the reasons set-forth below, the Meadows Petition is denied while the Natus Petition, Ramsey Petition and the Government's Motions are granted.
In August of 2014, the Government brought various criminal fraud and money laundering charges against Sean Meadows ("Defendant"). (Indict., Counts 1–12 [Doc. No. 1].) The Indictment sought the forfeiture of certain property acquired with the proceeds of Defendant's fraudulent enterprise, including real estate located at 973 Payne Ave., St. Paul, Minnesota ("Payne Ave. Property") and 15522 NE 49th Ave., Atwater, Minnesota ("Atwater Property"). (Id., Forfeiture Allegations.) On December 10, 2014, Defendant pled guilty to most of the charges against him. (See Court Minutes dated December 10, 2014 [Doc. No. 69].) Shortly thereafter, the Government sought and received a preliminary order of forfeiture which included the Payne Ave. Property and the proceeds from the sale of the Atwater Property.1 ( )
The Government then provided the notice of forfeiture required under 21 U.S.C. § 853(n)(1). In response, third parties Natus Corporation ("Natus"), County of Ramsey ("Ramsey County"), and Michelle Meadows ("Ms. Meadows") filed petitions claiming interests in the Payne Ave. and/or Atwater Properties. (See Natus Petition, Ramsey Petition, and Meadows Petition.) Natus claims an interest in the Payne Ave. Property by virtue of a mechanic's lien for $4,051.67 in unpaid labor and materials. (Natus Petition.) Ramsey County claims an interest in the Payne Ave. Property in the form of unpaid taxes and interest totaling approximately $19,404.05. (Ramsey Petition; Pl.'s Mem. in Supp. of Mot. for Partial Summ. Judg. ("Mem. in Supp.") at 4 [Doc. No. 157].) Ms. Meadows claims an interest in the proceeds from the sale of the Atwater Property. (See Meadows Petition at ¶¶ 9, 15–17.) She also claims an interest in the Payne Ave. Property. (See id. at ¶¶ 9–14, 17.)
The Government does not oppose the Natus or Ramsey County Petitions. (Mem. in. Supp. at 4, 11.) Nor does it oppose Ms. Meadows' claim to one-half of the proceeds from the sale of the Atwater Property.2 (Id. at 5, 11.) However, the Government opposes Ms. Meadows' claim to the Payne Ave. Property and moves for partial summary judgment and a final order of forfeiture.
(See Government's Motions.) Specifically, the Government contends that Ms. Meadows lacks standing because she does not have a legal interest in the Payne Ave. Property. Ms. Meadows argues that she has standing because funds from her 401(k) retirement account were used to purchase and improve the Payne Ave. Property and she subsequently exercised dominion and control over that Property.
Since there is no opposition to the Natus and Ramsey County Petitions, the Court grants those Petitions. Similarly, the Court grants the Meadows Petition to the extent Ms. Meadows claims an interest in half of the Atwater Property sale proceeds. However, for the reasons discussed below, the Court denies the Meadows Petition to the extent Ms. Meadows claims an interest in the Payne Ave. Property.
Ms. Meadows married Defendant in 2000. (Aff. of Michelle Meadows ("Meadows Aff.") at ¶ 1 [Doc. No. 162].) Starting in 2002, Ms. Meadows and Defendant (collectively, the "Meadows") began purchasing real estate for investment purposes. (Id. at ¶ 2.) In the summer of 2010, the Meadows were notified about an opportunity to purchase the Payne Ave. Property. (See id. at ¶ 4.)
After viewing the building and learning of a municipal program intended to revitalize the surrounding neighborhood, the Meadows agreed to purchase the Payne Ave. Property for approximately $40,000. (See id. at ¶¶ 5–6, 8.) Ms. Meadows attests that she and her husband decided that the best way to finance this purchase was for Ms. Meadows to take a loan from her 401(k) retirement account. (See id. at ¶¶ 7, 9.) However, on September 3, 2010, Defendant used a $10,000 cashier's check drawn from a TCF National Bank account registered to the Meadows Financial Group LLC ("Meadows Financial TCF Account") to put a down payment on the Payne Ave. Property.3 (See id. at ¶ 8; Decl. of Matthew Schommer ("Schommer Decl.") at ¶¶ 7–8 [Doc. No. 74].) The funds from the Meadows Financial TCF Account were traced to proceeds of Defendant's fraudulent enterprise. (Schommer Decl. at ¶ 8.)
On September 23, 2010, Ms. Meadows took a $50,000 loan from her 401(k) account. She alleges that she intended to use those funds as follows: (1) $10,000 to "replenish" the funds used by Defendant for the down payment, (2) approximately $30,000 to cover the remaining purchase price of the Payne Ave. Property, and (3) $10,000 to renovate the Property. (See Meadows Aff. at ¶¶ 9–10, Ex. B at 4–94 [Doc. No. 162-1].) According to Ms. Meadows, the only reason she took the loan was to finance the purchase and renovation of the Payne Ave. Property. (Id. at ¶ 16.) Ms. Meadows deposited the $50,000 from her 401(k) into the Meadows' TCF National Bank joint checking account ("TCF Joint Checking Account 3372") on September 28, 2010. (Id. at ¶ 11, Ex. C at 11–12.)
On September 29, 2010, Defendant withdrew approximately $30,000 as a cashier's check from the Meadows' TCF National Bank joint savings account ("TCF Joint Savings Account 3367"). (Id. at ¶ 12, Ex. D at 14–16; Schommer Decl. at ¶ 9.) He used that cashier's check to pay the remaining purchase price of the Payne Ave. Property at the closing the following day. (Meadows Aff. at ¶¶ 12–13.) Proceeds of Defendant's fraudulent enterprise were traced to the funds Defendant withdrew from TCF Joint Savings Account 3367. (Schommer Decl. at ¶ 9.)
On September 30, 2010, Ms. Meadows caused $30,000 to be transferred from TCF Joint Checking Account 3372 to TCF Joint Savings Account 3367 "to cover the final payment of the property." (Meadows Aff. at ¶ 13, Ex. D at 12–13.) However, Ms. Meadows did not attend the closing and the warranty deed titled the Payne Ave. Property exclusively to Defendant. Similarly, the Housing and Urban Development Settlement Statement, which accompanied the purchase, lists only Defendant as a buyer/owner of the Property. (See Weston Decl., Ex. B ("HUD Settlement Statement") [Doc. No. 158-2].)
During the fall of 2010, the Meadows worked together to hire and oversee various contractors who renovated the Payne Ave. Property. (See Meadows Aff. at ¶¶ 17–18.) These contractors were primarily paid in cash. (Id. at ¶ 18.) Ms. Meadows had "independent access" to the Property and visited it occasionally to examine the renovations and ensure it was in good repair. (See id. at ¶¶ 20–21.)
In late October 2010, Ms. Meadows transferred the remaining $20,000 of her 401(k) loan from TCF Joint Checking Account 3372 to TCF Joint Saving Account 3367 with the intent that it cover the renovation costs as well as Defendant's initial down payment. (See id. at ¶ 19, Ex. D at 14–16.) However, on October 22, 2010, Defendant withdrew $20,000 from TCF Joint Savings Account 3367 and deposited those funds in a Wells Fargo Bank account held exclusively in his name. (See Reply at 10; Decl. of Ephraim Holmgren ("Holmgren Decl.") at ¶¶ 4–5 [Doc. No. 165].) Defendant did not use those funds to "reimburse" the down payment or renovation costs of the Payne Ave. Property, but instead used them to gamble at a horse track and casino and transferred some to other accounts associated with Defendant's fraudulent enterprise. (See Reply at 10; Holmgren Decl. at ¶ 6.)
After unsuccessful attempts to sell the Payne Ave. Property, the Meadows decided to rent it and in July 2014 a tenant leased the space. (Meadows Aff. at ¶¶ 21–22.) However, only Defendant is listed as the landlord on the lease. (See Weston Decl., Ex. C ("Lease") [Doc. No. 158-3].) The Meadows used the rent they received to pay for household expenses like groceries and gas from July 2014 until July 2015 when, pursuant to...
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